• Crude Oil rises, then tumbles again in frothy energy markets.
• WTI backslides into $74.50 in exacerbated market volatility.
• OPEC production cuts unlikely to eat away at oversupply amidst declining demand.

West Texas Intermediate (WTI) Crude Oil is seeing a choppy session during Friday’s late-week trading, climbing back towards $77.00 per barrel before falling once more towards $74.50 as oil markets whip. Crude Oil saw a sharp rejection on Thursday as investors remain skeptical the Organization of the Petroleum Exporting Countries (OPEC) will be able to successfully execute recently-announced production cuts.

OPEC recently announced an additional million barrels per day (bpd) reduction in Crude Oil pumping quotas, but markets remain skeptical about the oil cartel’s ability to execute a production cap that is increasingly unpopular with many of its smaller constituent member states.

Lack of agreement over amounts, length of time, and general terms sees fossil fuel investors raising eyebrows as OPEC leaves itself no real method of enforcing compliance with the opt-in cuts, which are expected to run through the first quarter of 2024.

With OPEC’s meager million bpd production cut unlikely to chew through slumping global Crude Oil demand, oil barrel supply overhangs are expected to exacerbate in the coming months.

According to the US Energy Information Administration (EIA), US Crude Oil reserves climbed even further for the week into November 24th, adding 1.6 million barrels to current Crude Oil stocks. The number represents a notable decline from the previous week’s 8.7 million barrel addition, but it still overshot the market’s hopeful forecast of a 933K barrel drawdown.

WTI Technical Outlook

WTI Crude Oil is heading back into the low end on Friday after a cautious recovery gets cut short. US Crude Oil saw a sharp rejection from the 200-day Simple Moving Average (SMA) near $78.00 this week, and WTI is set to head into the Friday market close on the back foot.

Crude Oil has seen a rough, volatile, and lopsided consolidation phase lately, cycling in rough trade between $78.00 and $75.00 per barrel. A bearish extension from here will require significant momentum to crack the downside barrier near $74.00, while a topside swing will need to land somewhere closer to the 50-day SMA near the $82.00 handle.

WTI Daily Chart

WTI Technical Levels

• The DXY Index is seen with mild losses around 103.25, after reaching a high of 103.70, above the 200-day SMA.
• Fed Chair Powell warned that the bank will hike again if needed, keeping its data-dependency approach.
• The US ISM Manufacturing PMI declined in November, as expected.

The US Dollar (USD) Index has shown a modest decline, trading at 103.25, despite Federal Reserve Chair Jerome Powell's hawkish stance. The November ISM Manufacturing PMI came in lower than expected but didn’t trigger any significant downward movements in the Greenback. What seems to weaken the currency is that markets aren’t buying Powell’s hawkishness.

In line with that, despite cooling inflation and a mixed trend in the United States labour market, the Fed turned surprisingly less dovish, maintaining an open stance toward further policy tightening. While important gauges of inflation like the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE) have trended lower, the bank has declared that it needs to see more evidence of inflation cooling down, leaving the door open for further tightening if needed.

Daily Market Movers: US Dollar with mild losses despite Powell warning markets

•  Chair Powell noted that in a speech at Spelman College on Friday that it is “premature” to say monetary policy is restrictive enough and that the bank will raise rates again if needed to lower inflation.
• On the data front, the ISM Manufacturing PMI reported by the Institute for Supply Management marked 46.7 for November, on par with the previous figure while falling short of the anticipated 47.6.
• Looking ahead, a few key events are scheduled with implications for the US Dollar and expectations on the Fed next week, including Retail Sales data for November on Thursday, followed by the November Nonfarm Payrolls report on Friday.
• US bond yields are experiencing a downward trend with the 2-year, 5-year and 10-year yields standing at 4.57%, 4.16%, and 4.25%, respectively, and seem to limit the upside for the USD.
• According to the CME FedWatch Tool, market expectations for the December meeting indicate investors do not expect a rate hike. Additionally, swap markets are pricing in rate cuts midway through 2024.

Technical Analysis: US Dollar selling momentum persists, DXY capped by the 200-day SMA

The indicators on the daily chart paint a bearish picture of the US dollar. The Relative Strength Index (RSI) position underscores strong selling momentum, while the negative skew in the Moving Average Convergence Divergence (MACD) histogram further validates this downward pressure. 

Bolstering the bearish case, the DXY position in relation to the Simple Moving Averages (SMAs) reinforces the downward trajectory. With the DXY remaining below the 20, 100 and 200-day SMAs, it's apparent that buyers are facing an uphill battle against a prevailing bearish trend. 

Support levels: 103.15, 103.00, 102.90.
Resistance levels: 103.60 (200-day SMA), 104.00, 104.20 (100-day SMA)

• Silver is threatening to test YTD highs after reaching a multi-month high.
• For that outcome, XAG/USD needs to rally above the $26.00 figure.
• XAG/USD could turn bearish if it drops below the $25.00 mark.

Silver price rises during Friday’s North American session, reached a six-month high at around $25.46 before dipping to its current spot price. At the time of writing, the XAG/USD is trading at $25.38 after bouncing from a daily low of $25.09, gaining 0.54%.

XAG/USD remains bullish and set to challenge the May 10 daily high at $25.91, ahead of the $26.00 figure. A breach of the latter will expose the year-to-date (YTD) high of $26.12.

For the XAG/USD to flip bearish, it would need to drop below the November 30 high of $25.28. Once done the next support would be the November 29 daily low of $24.85, followed by the November 28 low of $.24.54. Further downside is seen at the November 17 swing high turned support at $24.14.

XAG/USD Price Analysis – Daily Chart

XAG/USD Technical Levels

Federal Reserve Chair Jerome Powell said on Friday that the central bank is getting what they wanted to get and they don’t have to be in a rush at the moment. He noted that inflation is still well above target but moving in the right direction. 

At a Fireside Chat at Spelman College in Atlanta, Powell explained that it is the data that will tell if the Fed has done enough or needs to do more. He argued they are on a path to get inflation down to the 2% target without large job loss. 

Chair Powell added that consumer spending has been surprisingly strong. Regarding fiscal policy he mentioned that is unsustainable in the long run. 

Key takeaways from opening remarks: 

Market reaction

During Powell's presentation, the US Dollar Index (DXY) accelerated to the downside, falling below 103.30. At 19:00 GMT, Powell will participate in a roundtable with Fed’s Governor Lisa Cook, speaking with technology innovators and entrepreneurs at Spelman College. 

• The EUR/GBP is extending into a seventh-straight day of losses as the Euro waffles.
• Eurozone data continues to build support for a dovish-leaning ECB.
• ECB President Lagarde to speak again on Monday.

The Euro (EUR) has accelerated declines against the Pound Sterling (GBP) in Friday trading, tumbling out of a near-term descending channel. The EUR/GBP tested 0.8580 during the US Friday market session with the Euro down nearly six-tenths of a percent against the Pound Sterling on the day.

The EUR is staring down the barrel of seven straight down days against the GBP, and the EUR/GBP has shed over 2% from mid-November’s peak bids near 0.8765. The Euro is on pace to see its worst consecutive-day performance in 2023, with the EUR/GBP set to close in the red for all but one of the last ten consecutive trading days.

The GBP is no stranger to flopping economic data, but this week’s dovish European Central Bank (ECB) showings is highlighting the Eurozone’s wobbling data releases on the economic calendar.

Eurozone inflation slipped faster than expected this week after the European Core Harmonized Index of Consumer Prices (HICP) printed below-forecast on Thursday, with the YoY figure for the annualized period into November slipping to 3.6% against the forecast 3.9%, extending a decline from October’s YoY print of 4.2%.

ECB's President Lagarde: Central bank to discuss QT in the “not too distant future”

ECB President Christine Lagarde made an appearance earlier in the week highlighting just how dovish the ECB has rotated in recent weeks, expressing the sentiment that quantitative easing could soon be back on the table for the Euro.

Next week will kick things off with yet another appearance from ECB President Lagarde on Monday, who will be speaking specifically about monetary policy at the Academy of Moral and Political Sciences, in Paris.

The UK follows up on Tuesday with BRC Like-For-Like Retail Sales for the year into November, forecast to tick down slightly from 2.6% to 2.5%. After that will be Eurozone Producer Price Index (PPI) figures, and the MoM number in October is expected to confirm a decline from September’s 0.5% to a nearly-flat 0.2%.

EUR/GBP Technical Levels

The EUR/GBP's bearish acceleration on Friday sends the pair tumbling out of a near-term descending channel from last week's high bids near 0.8760, and the pair easily slipped below the 0.8600 handle in Friday trading.

Intraday action has been steadily capped by the 50-hour Simple Moving Average (SMA) through most of the week's trading, and a seven-straight-day decline on the daily candlesticks sees the EUR/GBP falling away from the 200-day SMA at 0.8680.

The 50-day SMA barely had a chance to confirm a bullish crossover of the 200-day SMA before rotating back into a bearish stance, and the shorter-term moving average will be capping off any technical recoveries from ten-week lows.

EUR/GBP Hourly Chart

EUR/GBP Daily Chart

EUR/GBP Technical Levels

• Gold price rallied to a new multi-month high of $2060.62 amid Powell’s speech.
• Federal Reserve Chair Jerome Powell's remarks on soft inflation data and high core inflation boost Gold's appeal as a hedge.
• US interest rate expectations now include nearly 135 basis points of Fed rate cuts by the end of 2024, as indicated by money market futures.

Gold price extended to a new seven-month high in the mid-North American session after the US Federal Reserve Chair Jerome Powell welcomed recently revealed soft inflation data, though stressed core inflation “is still too high.” At the time of writing, the XAU/USD is trading at around $2059, gaining more than 1.10%.

XAU/USD extended its gains despite Powell’s neutral stance

During a Q and A session, Fed Chair Powell said, “Wed (Fed) are getting what we wanted to get,” giving a green light on bullion traders, which took advantage of XAU/USD’s dip to the $2044.50 area, before jumping to new day and multi-month highs. Meanwhile, US Treasury bond yields are plunging, with the 10-year benchmark note coupon dropping six and a half basis points, at 4.263%, after reaching a high of 4.349%, a tailwind for Gold prices.

Consequently, the Greenback tumbles, as revealed by the US Dollar Index, which measures the currency against six peers, down 0.24%, at 103.26.

In the meantime, money market futures show investors are expecting close to 135 basis points of Fed rate cuts for the end of 2024.

Earlier, the Institute for Supply Management (ISM) revealed the Manufacturing PMI for November, which showed that business activity remains in contraction for the thirteenth straight month. Prices paid by manufacturers rose while the employment index eased, in alignment with the recent unemployment claims data.

XAU/USD Price Analysis: Technical outlook

Gold’s is rallying sharply, with buyers eyeing all time high of $2081.82. It should be point out, there’s no additional resistance levels on its way, besides the $2060 and $2070 areas. Once those psychological levels are taken out, the ATH would be at reach. On the flip side, the first support is seen at the November 29 daily high at $2052.13, before opening the door slip to November’s 30 daily low at $2031.58.

• USD/JPY experiences a 0.52% decline in the North American session.
• A lower-than-expected ISM manufacturing reading for November weighed on the US Dollar.
• Fed Chair Jerome Powell acknowledges some easing in inflation but emphasizes that core inflation remains high and monetary policy decisions will be data dependent.

The USD/JPY trims some of its Thursday gains on Friday, diving below the Ichimoku Cloud (Kumo) early in the North American session. At the time of writing, the pair is exchanging hands at 147.35, registering losses of 0.58%.

USD/JPY drops due to a subdued ISM Manufacturing PMI, despite Powell’s neutral stance

The sudden US Dollar weakness was triggered by a softer Institute for Supply Management (ISM) reading for November, which showed that business activity remained subdued at 46.7, unchanged from the October reading, and the 13^th straight month standing below 50, the expansion/contraction threshold, which indicates the manufacturing sector is underperforming. Estimates for the ISM were at 47.6, while some subcomponents of the index like Employment showed the labor market is easing. Regarding inflationary pressures, the prices subcomponent jumped from 45.1 to 49.9, which could prevent Federal Reserve’s (Fed) officials from reducing monetary policy.

In the meantime, Fed Chairman Jerome Powell is crossing the newswires. In prepared remarks, he acknowledged that inflation has eased, but core inflation is too high. He added that he needs to see more progress on lowering inflation to its 2% target. He said that rates are restrictive but it’s “premature” to say that monetary policy is restrictive enough. Chair Powell said decisions would be made meeting by meeting decisions.

On the Japanese front, the Jibun Bank Manufacturing PMI was 48.3 at contractionary territory, above estimates but below October’s 48.7. in the meantime, the Japanese labor market remains tight as the unemployment rate fell to 2.5% in October, data showed on Friday.

USD/JPY Price Analysis: Technical outlook

The downtrend remains in place, but the USD/JPY break below the Kumo could accelerate prices to fall toward the 146.00 figure. A daily close below 147.60, the bottom of the cloud, could open the door to test 147.00. A breach of the latter would expose the September 11 daily low of 145.89, before prices slump to September’s 1 swing low at 144.43. On the other hand, if buyers keep exchange rates inside the Kumo, that could pave the way for consolidation.

Most recent article: Canadian Dollar gains across the board on Thursday despite mixed Canadian GDP growth

• Canadian Dollar sees further gains heading into the end of the trading week.
• Canada's new job hiring outpaced market expectations, but the unemployment rate ticked slightly higher.
• Canadian wage growth holds steady at 5%.

The Canadian Dollar (CAD) is testing higher ground in Friday trading, climbing once more against its largest peer, the US Dollar (USD), after Canadian employment figures handily trounced market expectations. The Canadian Dollar is one of the top-performing currencies for the week, having gained a full percent against the US Dollar from Monday’s opening bids.

Canada added almost twice as many jobs as the median market forecast expected in November, showing almost 25K new hires against the forecast of 15K, increasing the pace of new job additions from October’s 17.5K. 

The Canadian Unemployment Rate ticked slightly higher to 5.8%, in line with investor expectations, and Average Hourly Wages for the year into November held steady with October’s print of 5%, helping to ease demand-driven inflation concerns as Canadian wage growth remains capped under 6%.

Daily Digest Market Movers: Canadian Dollar is on the move against the US Dollar once more, challenging 1.3500

• The Canadian Dollar is up three-tenths of a percent against the US Dollar on Friday.
• Canada added 24.9K jobs in November compared to the previous 17.5K, beating expectations of a 15K print.
• Despite beating market forecasts, Canadian hiring remains below 2023’s peak print of 150K in February.
• CAD supremacy is limited by a slight decline in the Canadian S&P Global Manufacturing Purchasing Managers Index (PMI), which slipped from 48.6 to 47.7.
• The Canadian Unemployment Rate slightly increased from 5.7% to 5.8%, but markets broadly anticipated this figure.
• The CAD is still shrugging off Thursday’s Gross Domestic Product (GDP) backslide after quarterly GDP unexpectedly declined 1.1% for the third quarter. Investors are instead focused on the extreme upside revision of 2Q’s GDP growth from -0.2% to 1.4%.
• Crude Oil markets are as volatile as ever but continue to range as fossil fuel investor sentiment plays tug-of-war between declining global demand concerns and a fresh batch of Organization of the Petroleum Exporting Countries (OPEC) Crude Oil production cuts set to continue through Q1 2024.

Technical Analysis: Canadian Dollar tests 1.3500 against the US Dollar after sliding into the 200-day SMA

The Canadian Dollar (CAD) continued its climb against the US Dollar (USD) on Friday, sending the USD/CAD down to the 1.3500 handle in Friday trading, and the pair is currently snarled along the 200-day Simple Moving Average (SMA) near 1.3520.

The Canadian Dollar has climbed against the US Dollar for four of the last five consecutive trading days, and the USD/CAD is on pace to close out Friday action with one more down day as the pair trades into eight-week lows.

With the USD/CAD down nearly 3% from November’s early peak at the 1.3900 handle, technical indicators have accelerated firmly into oversold territory. The 14-day Relative Strength Index (RSI) is testing the lower, oversold bound, and the Moving Average Convergence-Divergence (MACD) signal line has rotated into negative territory.

USD/CAD Hourly Chart

USD/CAD Daily Chart

• The AUD/USD tallied modest gains, seeing action around the 0.6650 level.
• The US reported mixed ISM PMIs. China's PMIs were better than expected and tractioned the Aussie.
• Investors will look for clues in Jerome Powell’s speech at Spelman College in Georgia.

In Friday's trading session, the Australian Dollar (AUD) found demand against its US counterpart, with the AUD/USD pair making gains and trading at around 0.6650. The pair's upward movement seems to be the positive PMI figures from China, which improved in November. As the Chinese economy plays a big role in the Australian economy, positive figures tend to benefit the Aussie.

On the US side, for the 12th consecutive month, the US manufacturing sector experienced a contraction in economic activity in November. The ISM Manufacturing PMI remained unchanged at 46.7, lower than the market's expectation of 47.6. Focus now turns to Jerome Powell’s speech at 16 GMT and 19 GMT at two separate events organised by Spelman College in Georgia.

In that sense, inventors will look for clues regarding the Federal Reserve (Fed) analysis of the recent data released by the US, which saw the US Consumer Price and Personal Consumption Expenditures Indexes, two important gauges of inflation for the bank decelerating in the last months.

AUD/USD levels to watch

On the AUD/USD daily chart, it is evident that the buying momentum is dominating. The Relative Strength Index (RSI) is nearing overbought territory, while the histogram of the Moving Average Convergence Divergence (MACD) showcases rising green bars, reaffirming this buying trend. 

Moreover, the AUD/USD is hovering above its 20, 100, and 200-day Simple Moving Averages (SMAs). This position is suggestive of sustained bullish momentum, as the pair is trading above these crucial markers, solidifying the control of the bulls on the broader scale.

Support Levels: 0.6600, 0.6580 (200-day SMA), 0.6500.
Resistance Levels: 0.6670, 0.6700, 0.6730.

AUD/USD daily chart

Despite the Federal Reserve continuing to deliver a restrictive policy stance in 2023, Gold posted a very respectable performance, which saw prices hit $2,000 several times. Strategists at TD Securities analyze the yellow metal’s outlook.

Gold could well be range-bound for a quarter or so

Strategists at Commerzbank analyze the long-term outlook for German power prices.

Electricity prices even threaten to rise in the coming years

FOMC to cut in 2024, with an easing cycle of 200 bps, economists at ANZ Bank report.

Positive real rates through the cycle

Oil price witnessed an average 10% drop during November. Economists at ABN Amro analyze Oil’s market outlook.

Brent to reach $95 by end-2024

• Mexican Peso finished November with gains of more than 3.60% and began December in a positive tone.
• Mexico and US interest rate differential favors the Peso, as Fed officials have shifted dovish.
• USD/MXN traders are eyeing several US Federal Reserve Chair Jerome Powell speeches.

Mexican Peso (MXN) stages a comeback against the US Dollar (USD) as the last month of the year begins, even though the Greenback posts solid gains against a basket of six currencies, namely the US Dollar Index (DXY). The USD/MXN slips below the confluence of technical support levels, which turned resistance, and trades below 17.30, down 0.71% on the day.

The Mexican currency had a positive month in November, posting gains of 3.65%, a solid recovery compared to October's 3.60% losses. The main driver for price action continues to be interest rate differentials between both countries, with 600 basis points of spread favoring the Mexican Peso. In addition, market participants seem confident the US Federal Reserve (Fed) ended its tightening cycle after previously “hawks” members delivered dovish remarks. In the meantime, the release of the Fed’s preferred gauge for inflation, the Core Personal Consumption Expenditures (PCE) Price Index, showed the disinflationary process in the US continued. USD/MXN traders are eyeing the Fed Chairman Jerome Powell's speech at 16:00 GMT.

On the Mexican front, the Bank of Mexico (Banxico) revised its economic projections for 2023 and 2024, saying that inflation would reach its 3% target in 2025. Governor Victoria Rodriguez Ceja said discussions to ease monetary policy could begin in the first quarter of 2024. Deputy Governor Jonathan Heath emphasized the bank would be data-dependent and deliver gradual rate cuts. Ahead into the calendar, S&P Global would release the Manufacturing PMI.

Daily digest movers: Mexican Peso on the offensive despite Banxico’s dovish remarks, await Fed Chair Powell

• Banxico revises economic growth upward from 3% to 3.3% for 2023 and projects the economy would rise from 2.1% to 3% in 2024.
• Regarding inflation prospects, the Mexican central bank foresees headline inflation at 4.4% in Q4 2023 (5.3% for core), while at the end of 2024, it is estimated at 3.4% (3.3% for core). The central bank forecasts headline and core inflation not to hit the 3% target imposed by the institution until 2025.
• The US Core Personal Consumption Expenditures (PCE) Price Index, the Fed’s gauge for inflation, rose by 3.5% YoY in October, as expected, below the previous month’s 3.7%.
• Headline inflation measured by the PCE Price Index slowed from 3.4% to 3.0% in the last twelve months, as foreseen by analysts.
• Interest rate traders expect 115 basis points of rate cuts by the US Federal Reserve in 2024.
• On November 27, Banxico’s Deputy Governor, Jonathan Heath, commented that core prices must come down more, adding that one or two rate cuts may come next year, but “very gradually” and “with great caution.”
• On November 24, a report revealed the economy in Mexico grew as expected in the third quarter on an annual and quarterly basis, suggesting the Bank of Mexico would likely stick to its hawkish stance, even though it opened the door for some easing.
• Mexico's annual inflation increased from 4.31% to 4.32%, while core continued to ease from 5.33% to 5.31%, according to data on November 23.
• A Citibanamex poll suggests that 25 of 32 economists expect Banxico's first rate cut in the first half of 2024.
• The poll shows “a great dispersion” for interest rates next year, between 8.0% and 10.25%, revealed Citibanamex.
• The same survey revealed that economists foresee headline annual inflation at 4.00% and core at 4.06%, both readings for the next year, while the USD/MXN exchange rate is seen at 19.00, up from 18.95, toward the end of 2024

Technical Analysis: Mexican Peso picks up pace as USD/MXN slips below the 20, 100-day SMAs; 17.00 in sight

The USD/MXN resumed its downtrend after briefly piercing above the 20 and 100-day Simple Moving Averages (SMAs) at 17.32 and 17.34, respectively, and reaching a two-week high shy of 17.50. Nevertheless, buyers were unable to cling to gains, and the pair has returned back below the 20 and 100-day SMAs.

For a bearish continuation, the exotic pair needs to break below 17.25, a solid resistance level during the week that turned support. Once breached, the next support would be 17.05, ahead of the psychological 17.00 figure. If bulls regain the 20-day SMA, that could open the door for USD/MXN to reclaim the 100-day SMA at 17.34, ahead of challenging 17.50.

The Bank of Canada (BoC) is set to announce its Interest Rate Decision next week. There is modest room for a hawkish (although short-lived) market reaction, in the view of economists at ING.

Market impact shouldn’t be big this time

EUR/USD declined below the 1.09 mark. Economists at Société Générale analyze the pair’s outlook. 

The pace of EUR/USD appreciation should be gradual

• ISM Manufacturing PMI remained at 46.7 in November. 
• US Dollar Index trimmed daily gains and fell to 103.50. 

The economic activity in the US manufacturing contracted in November, for the 12th consecutive month, with the ISM Manufacturing PMI at 46.7, unchanged from October. This reading came in worse than the market expectation of 47.6.

Key takeaways from the report:

Market reaction

The US Dollar Index pulled back modestly after the ISM report, falling toward the 103.50 area. However, EUR/USD remained near daily lows at 1.0850. 

Ulrich Leuchtmann, Head of FX and Commodity Research, shares his view about structural shifts in volatility.

Will the situation of structurally low volatility persist?

Dollar has fallen a little over 3% from its October highs. Economists at ING analyze Greenback’s outlook for the next year.

Dollar to turn lower

Economist at UOB Group Ho Woei Chen, CFA, assesses the latest PMI readings in the Chinese economy.

Key Takeaways

Economists at Wells Fargo expect the Australian Dollar to outperform next year.

Further monetary tightening cannot be ruled out

- EUR/USD continues to lose momentum below 1.0900.

- Extra decline could revisit the key 200-day SMA near 1.0820.

EUR/USD weakens further and extends the recent breakdown of the key 1.0900 support on Friday.

The continuation of the downtrend could retest a minor support at the weekly low of 1.0852 (November 27). The loss of this level could put a potential test of the critical 200-day SMA, today at 1.0817, back on the radar sooner rather than later.

So far, while above the significant 200-day SMA, the pair’s outlook should remain constructive.

EUR/USD daily chart

Economists at UOB Group Enrico Tanuwidjaja and Sathit Talaengsatya comment on the latest BoT monetary policy meeting.

Key Quotes

• DXY keeps pushing harder and flirts with the 103.60 area.
• The surpass of the 200-day SMA opens the door to extra gains.

DXY advances for the third session in a row and hovers around the 103.60 zone at the end of the week.

If the key 200-day SMA around 103.60 is cleared, the index is expected to face more sustained gains to, initially, the weekly top of 104.21 (November 22) prior to the temporary 100-day SMA at 104.34.

In the meantime, above the key 200-day SMA, the outlook for the index is expected to shift to bullish.

DXY daily chart

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Economists at TD Securities explore the recent drivers of CAD and make the case that it will appreciate vs. the USD.

Canada will not be immune to a slowing US, but it has some offsets

Gold price achieved a seven-month high of around $2,050 this week. Economists at Commerzbank analyze the yellow metal’s outlook.

There will doubtless be little in the way of upside potential on Gold 

• The Swiss Franc weakens after Q3 GDP data comes out mixed – YoY missing estimates; QoQ beating.
• CHF finds a floor against US Dollar as sentiment improves for the Greenback. 
• EUR and GBP stabilize against Swiss Franc after a steep sell-off. 

The Swiss Franc (CHF) weakens on Friday after the publication of mixed GDP data for the third quarter. On a YoY basis, the Swiss economy grew by 0.3% in Q3 versus the 0.5% expected, according to the State Secretariat of Economic Affairs. Quarter-on-quarter, however, GDP gained more than expected, helping to balance out the poor YoY result. 

Most of the Swiss Franc’s major pairs found a floor on Friday after ferocious sell-offs. USD/CHF may have hammered out a low after a turnaround in bearish sentiment towards the US Dollar. EUR/CHF halted its steep decline after the Swiss GDP data. GBP/CHF likewise seems to have halted its decline. 

Daily digest market movers: USD/CHF rebounds after USD finds favour

• The Swiss Franc weakens marginally after Swiss GDP growth in Q3 came out lower than analysts had forecast on a YoY basis – 0.3% vs 0.5% expected. 
• The QoQ figure, however, showed an unexpected 0.3% gain versus the 0.1% expected and the 0.1% decline previously. 
• The US Dollar recouped earlier losses from lower-than-expected PCE inflation data and surprise dovish commentary from Federal Reserve Board Member Christopher J. Waller. 
• With global data dipping and inflation cooling in most major economies, investors now see interest rates at risk of coming down all over the world, not just in the US. 
• Commentary from Federal Reserve Chair Jerome Powell on Friday is being eyed for further guidance prior to the next Fed meeting’s blackout period begins.   

Swiss Franc technical analysis: USD/CHF hammers out a floor

USD/CHF – the number of Swiss Francs that one US Dollars can buy – is an overall downtrend on the short and medium-term timeframes, and in a long-term range. 

Overall, the trend is biased to extend lower. The next major target to the downside is the round number level at 0.8600, followed by the 2023 low of 0.8552. A break below Thursday’s 0.8683 lows would provide bearish confirmation.

US Dollar vs Swiss Franc: Daily Chart

The pair has just found a floor at key long-term range lows and formed a textbook hammer Japanese candlestick pattern on Thursday. If Friday ends bullishly and closes above Wednesday’s open at 0.8780, it would confirm the hammer reversal and probably signal the beginning of a short-term recovery for the pair. 

It is possible the pair has formed a measured move price pattern since the October 3 highs (see chart above). Measured moves are three wave patterns that look like large zig-zags. The first and third waves are usually of a similar length. If this is the case, then there is a possibility wave C may have completed. This would suggest a lull in selling pressure and the possibility of a short-term recovery. Given price has not started rising very strongly yet, however, this is still highly speculative, and the trend remains down.

Daily digest market movers: EUR/CHF ends blood-letting as ECB officials play down rate cuts

• The Swiss Franc weakened after Swiss GDP data failed to meet estimates in Q3 on a YoY basis. QoQ GDP data, however, beat estimates, helping to balance out the figures. 
• The Euro weakened considerably on Thursday after flash estimates showed the Eurozone Harmonised Index of Consumer Prices (HICP) inflation decelerated more than anticipated, to 2.4% YoY in November from 2.9% in the previous month. 
• Core Eurozone HICP increased by 3.6%, substantially down from October’s final print of 4.2% and missing market expectations for a 3.9% rise. 
• The data suggested a risk the European Central Bank (ECB) might consider cutting interest rates, and weighed heavily on the Euro.
• Lower interest rates tend to weaken a currency as they lead to lower capital inflows. 
• Despite the lower-than-expected inflation data, ECB officials have said that it may be too early to reduce interest rates.  

Swiss Franc technical analysis: EUR/CHF sell-off abates

EUR/CHF – the number of Swiss Francs that one Euro can buy – fell off a cliff midweek and into Thursday. As the week comes to a close, however, it has recovered some ground and is now trading just above a major support and resistance line at 0.9520, which held up prices during the summer.

Euro vs Swiss Franc: Daily Chart

The pair is in a downtrend on all timeframes, suggesting bears have the upper hand and prices should continue lower. 

A break below the 0.9470 lows would confirm the bearish bias and see prices fall to the next key support area at the 0.9417 October lows. 

Daily digest market movers: GBP/CHF remains supported by hawkish outlook for BoE

• The Swiss Franc loses ground against the Pound Sterling on Friday after mixed Swiss GDP data.
• Bank of England officials are maintaining a hawkish line as inflation in the UK remains well above target, supporting the Pound.
• Interest rate-setter Megan Greene from the Bank of England expressed concerns about persistently high inflation, indicating that interest rates might need to remain elevated for an extended duration. This perspective contrasts with some recent data suggesting a potential downturn in the economy. 

Swiss Franc technical analysis: GBP/CHF bouncing around on long-term range floor

GBP/CHF – the number of Swiss Francs that one Pound Sterling can buy – is broadly in a sideways trend. Thursday’s sell-off found a floor at 1.1000, a significant long-term support level and the bottom of the range. 

The pair is currently trading just above support from the 50-day Simple Moving Average (SMA, Red). 

Pound Sterling vs Swiss Franc: Daily Chart

Buyers and sellers are evenly balanced. A buy signal from MACD on the weekly chart coincided with the October lows. This was followed by the recovery witnessed in late October and early November. There is a chance of this move continuing. A break above the 1.1150 highs and the consolidation zone formed in early November would provide confirmation of further upside, which could see the pair claw its way back up to the long-term range highs just below 1.1500.

The USD is ending the week and starting the month somewhat on the defensive versus most major currencies. Economists at Scotiabank analyze Dollar’s outlook.

Relatively light data schedule ahead of the weekend for US markets

• The US Dollar trims losses and approaches resistance at 148.70.
• Higher US yields are supportring the USD ahead of Powell's speech.
• Hopes of some BoJ monetary policy normalisation in 2024 are expecte to underpin the Yen.

The US Dollar is attempting a recovery from 2, ½-month lows at 146.65 favoured by a mild recovery on US Treasury yields, which is weighing on the Japanese Yen.

The broader trend, however, remains negative as the soft US inflation and the somewhat weaker macroeconomic data have practically confirmed the end of the Federal Reserve’s tightening cycle.

All eyes are on Fed Powell's conference

Also on Thursday, the New York Fed President, John Wiliams, suggested that interest rates might be at their peak endorsing that view. In this context, Fed Chairman Powell’s conference due later today will be analysed in detail to assess the bank’s next steps.

On the other hand, increasing expectations that the Bank of Japan will exit its ultra-loose monetary policy in 2024 are providing some support to the JPY.

From a wider perspective, the pair maintains the bearish bias from mid-November highs near 152.00, with resistance at 148.75 highly likely to cap bulls ahead of the November 22 and 23 highs at 149.75. Supports are 147.77 and 146.65.

Technical levels to watch

CAD has extended gains on USD to low 1.35s. Economists at Scotiabank analyze Loonie’s outlook.

Soft undertone into the end of the week

• EUR/JPY appears side-lined in the low 161.00s on Friday.
• Further losses should face provisional support near 159.60.

EUR/JPY alternates ups and downs around 161.30 on Friday, extending the consolidative mood in the lower end of the recent range.

The continuation of the downward bias carries the potential to motivate the cross to break below the 160.00 round level and revisit the interim 55-day SMA at 159.58.

So far, the longer term positive outlook for the cross appears favoured while above the 200-day SMA at 153.64.

EUR/JPY daily chart

• XAU/USD is trading sideways with bears limited above $2,030.
• Gold is losing momentum with US Treasury yields are picking up.
• A dovish Powellmight send Gold higher.

Gold Prices are trading sideways on Friday, with bulls capped below the $2,045 resistance area with the $2,030 level containing downside attempts so far.

US Yields picking up from lows

US Treasury yields are picking up from multi-week lows, which has cushioned US Dollar weakness after the softer inflation levels seen on Thursday and added negative pressure on the precious metal.

Today the spotlight is on the Federal Reserve’s Chairman, Jerome Powell who is speaking at Spielman College in Atalanta. Powell will not mention rate cuts but the investors will be attentive for signals of a dovish turn, which would give a fresh impulse to Gold higher.

From a technical perspective, the XAU/USD maintains the bullish trend intact while above the $2,030 and $2,010 support levels. Below here, the next target is $1,985. Resistances are $2,045 and 2,066.

Technical Levels to Watch

GBP/USD holds above 1.26. Economists at Scotiabank analyze the pair’s outlook.

EUR/GBP soft tone extends to test 0.86

See – EUR/GBP: Room open to further falls – MUFG

EUR/USD pivots around 1.09. Economists at Scotiabank analyze the pair’s outlook.

Euro consolidates recent gains

• The Greenback trades a touch softer after its firm move up on Thursday.
• US traders are set to hear from US Fed Chairman Powell ahead of the blackout period.
• The US Dollar Index is steady above 103 and just a sigh away from ending the week in the green.

The US Dollar (USD) bulls have made a staggering comeback this week. At one point the US Dollar Index (DXY) was even trading in the green on the weekly time frame. The main driver is the rate differential between the US and the rest of the world. This got a bit bigger again after the recent plunge in US rates. These too recovered this week.

On the economic front, two main elements could still add some US Dollar strength to this week's move. The first is a speech from US Federal Reserve Chairman Jerome Powell right at the end of this trading day and the second a different set of numbers from the Institute of Supply Management. Should both elements turn out in favour of the Greenback, expect to possibly even see a close above 104 this evening at the US closing bell. 

Daily digest: Powell to choose sides

• Around 14:45 GMT the day kicks off with the S&P Global Purchase Manufacturing Index (PMI) for Manufacturing. Previous was at 49.4, a stand still is expected.
• Near 15:00 GMT this week’s last batch of data will be released:
  1. Construstruction Spending for the month is due to come out: Previous was at 0.4% and it is expected to remain unchanged.
  2. The Institute for Supply Management (ISM) will release its figures with the Employment Index for November: Previous was at 46.8 and forecast is for 47.2.
  3. ISM Manufacturing New Orders Index is expected to head from 45.5 to 46.7.
  4. ISM Manufacturing PMI will rise from 46.7 to 47.6.
  5. ISM Manufacturing Prices Paid is to soar from 45.1 to 46.2.
• Fed speakers this Friday as it is the last moment before the blackout period ahead of the last Fed rate decision for 2023.
  1. Austan Goolsbee from the Chicago Fed is due to speak nar 15:00 GMT.
  2. Fed Chairman Jerome Powell is due to speak nar 16:00 GMT.
  3. Chairman Powell will speak again at 19:00 GMT.
  4. Lastly Lisa Cook from the Fed’s board of governors will speak as well around 19:00 GMT.
• Right at the end of this Thursday, the US Treasury is heading to markets to allocate a 4-week bill. 
• Equities are sliding lower with the Hang Seng having a very bad week this week: again down over 1%. European and US equities are mildly in the green. 
• The CME Group’s FedWatch Tool shows that markets are pricing in a 99.4% chance that the Federal Reserve will keep interest rates unchanged at its meeting in December.  
• The benchmark 10-year US Treasury Note trades at 4.31%, and steady off this week’s low.

US Dollar Index technical analysis: flipping over

The US Dollar is holding good cards here to take the upper hand this week and end its losing streak. US Fed Chairman Jerome Powell will need to choose if he backs the dovish comments from Fed’s Governor Christopher Waller, or sticks with the steady-for-longer view from San Francisco Fed’s Mary Daly. The latter could be enough to shoot the US Dollar Index (DXY) back above 104.

The DXY is making its way up towards the 200-day Simple Moving Average (SMA), which is near 103.58. The DXY could still make it through  there, should Powell comments be enough for another push higher. A two-tiered pattern of a daily close lower followed by an opening higher would quickly see the DXY back above 104.28, with the 200-day and 100-day SMA turned over to support levels. 

To the downside, historic levels from August are coming into play, when the Greenback summer rally took place. The lows of June make sense to look for some support, near 101.92, just below 102. Should more events take place that initiate further declines in US rates, expect to see a near full unwind of the 2023 summer rally, heading to 100.82, followed by 100.00 and 99.41.

Economist at UOB Group Lee Sue Ann reviews the latest interest rate decision by the RBNZ.

Key Quotes

Economists at ING do not expect European currencies to lead the pack of appreciation against the US Dollar.

European currencies set to lag

• The US Dollar drops further as US PCE confirms the disinflationary trend.
• All eyes today are on Fed Powell's conference.
• Soft Canadian data and lower oil prices are likely to weigh on the CAD.

The US Dollar was rejected at the 1.3625 resistance area on Thursday and resumed its broader downtrend against its Canadian counterpart reaching two-month lows near 1.3500 so far.

Lower inflation hints at end of the Fed's hiking cycle 

US PCE Prices Index data released on Thursday endorsed the lower inflation and softer macroeconomic scenario seen over the last week. This has boosted confidence that the Fed has reached its terminal rate and is acting as a headwind for US Dollar bulls.

Later today, Chairman Powell and other US Fewd officials are hitting the press and their comments will be observed with special interest. Any signal towards a dovish turn on the bank’s forward guidance is likely to increase bearish pressure on the pair.

In Canada November’s employment figures are expected to show that the labour market is softening, which, coupled with the weak GDP data seen on Thursday and the lower oil prices might keep CAD upside attempts limited.

Technical indicators are negative with the RSI still above oversold levels. The next supports are 1.3500 and the September 29 low at 1.3420. On the upside, resistances are at the mentioned 1.3615 and 1.3700.

Technical levels to watch

Silver is projected to do well as it trends toward $26, strategists at TD Securities report.

Dovish pivot, economic recovery and electrification positives for Silver

EUR/USD has returned to 1.09. Economists at ING analyze the pair’s outlook.

Adverse short-term rate spread

See: The coming monetary policy phase should be rather favorable for EUR – Commerzbank

• WTI Oil steady near $76, failed to breach $80 on Thursday.
• The US Dollar is flat for this week and might flip into a positive performance on Powell comments.
• Oil could sink lower now that markets are lacking conviction of further upside in Oil prices. 

Oil prices are starting to wobble and could start to sell-off as markets clearly are disappointed by the deal delivered on Thursday by OPEC+. It almost seemed the deal was constructed out of duct tape and some kids glue, with Russia being the only parent in the room to save the deal. The split division clearly has bitten into OPEC+’s credibility and might put questions going forward on if a price floor in Oil  is manageable by the group seeing their recent lacklustre performance. 

The US Dollar (USD) meanwhile is soaring and erased all losses from the past week. With just one trading day left, the week could still close in the green for the US Dollar Index (DXY). All eyes will be on US Federal Reserve (Fed) Chairman Jerome Powell who will speak twice this Friday ahead of the Fed’s official blackout period prior to its last rate decision for 2023.

Crude Oil (WTI) trades at $76.17 per barrel and Brent Oil trades at $80.87 per barrel at the time of writing. 

Oil news and market movers: OPEC+ dropped the ball

• India is shoring up its Oil imports, with a restart of imports of Venezuelan Oil after a three-year drought.
• More India news on the wires as it has increased Oil imports from Russia and Iraq in the last month as refiners are looking for stock with soaring production demand in place. 
• Market analysts remain very sceptical in the aftermath of the OPEC+ meeting on Thursday. The cuts are not enough and remain voluntary, which is not enough to create a substantial floor in the price of Oil.
• COP28 is now taking place in Dubai with all big leaders of state having arrived overnight. headlines are expected to come out throughout this Friday and over the weekend. 

Oil Technical Analysis: Done and dusted

Oil prices have had a wild ride on Thursday, though looking back the credibility of OPEC+ has been dented. The fact that Russia had to step in and take one third of the supply cuts, circumventing Angola and Nigeria refusing to comply with any production cuts whatsoever, shows that the group is missing a leader who can create momentum and decisive decision making. Expect markets to send Oil further south as the placement of a price cap by OPEC+ has failed and will see more downturn as of this week.

On the upside, $80.00 is the resistance to watch out for. Should crude be able to jump above that again, look for $84.00 (purple line) as the next level to see some selling pressure or profit taking. Should Oil prices be able to consolidate above there, the topside for this fall near $93.00 could come back into play.

On the downside, traders are seeing a soft floor forming near $74.00. This level is acting as the last line of defence before entering $70.00 and lower. Watch out for $67.00 with that triple bottom from June as the next support level to trade at. 

US WTI Crude Oil: Daily Chart

• Pound bulls fail to extend beyond 1.2670.
• UK Manufacturing PMI beats expectations in November.
• The US Dollar ticks up with all eyes on Fed Powell.

Sterling’s rebound seen after the better-than-expected manufacturing data has been short-lived. Bulls have been capped at 1.2675, which leaves the pair in no man’s land with the near-term upside trend losing steam.

UK manufacturing data fails to boost the Pound

UK S&P  Global/CIPS Manufacturing PMI improved to 47.2 in November, from 46.7 in October, beyond expectations of a 46.6 reading. Earlier today Nationwide revealed that housing prices increased against expectations in November.

On the other hand, the US Dollar has ticked up from session lows, with te marke bracing for a slew of Fed speakers later today with a special interest on Fed Chairman, Jerome Powell. This is weighing on GBP bulls.

From a technical perspective, the near term remains positive yet price action shows hesitation below 1.2700. The “Evening star” candle pattern in the daily chart suggests the possibility of a downside correction.

Immediate resistance is at 1.2627 ahead of November’s high, at 1.2730. On the downside, supports are 1.2590 and 1.2410.

Technical levels to watch

EUR/GBP has declined to the lower end of the 0.86-0.87 range. Economists at MUFG Bank analyze the pair’s outlook.

Risks are skewed to the downside

The resumption of the selling pressure in USD/CNH should face a key obstacle at 7.1100 for the time being, comment UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

Bond markets finished November with a flourish. Economists at Société Générale analyze December’s seasonality. 

Seasonality could spoil year-end bond rally

The US Dollar depreciation has been substantial – we have entered the final month of 2023 and in November, we had a sharp drop for the USD of 3.0%. Economists at MUFG Bank note that There is a seasonal bias that is quite compelling for EUR/USD in December. 

Quite compelling seasonal bias for EUR/USD in December

Considering advanced prints from CME Group for natural gas futures markets, open interest remained choppy and went up by around 19.5K contracts on Thursday. In the same direction, volume resumed the uptrend and increased by around 32.4K contracts.

Natural Gas: Next on the downside comes $2.600

Prices of natural gas seems to have entered a consolidative phase in the lower end of the monthly range. Thursday’s inconclusive price action came in tandem with rising open interest and volume and exposes further side-lined trading in the very near term. In the meantime, the key 200-day SMA near the $2.600 region per MMBtu continues to hold the downside for the time being.

Gold price climbs to a seven-month high on the back of rate cut expectations. Economists at Commerzbank analyze the yellow metal’s outlook.

Current expectations of Fed rate cuts of 50 bps by mid-2024 are more likely to be disappointed

USD/CAD continues its decline and trades below the mid-1.35s. Economists at Société Générale analyze the pair’s technical outlook. 

Recent pivot high at 1.3760 could provide resistance

Gold prices fell in India on Friday, according to data from India's Multi Commodity Exchange (MCX).

Gold price stood at 62,442 Indian Rupees (INR) per 10 grams, down INR 85 compared with the INR 62,527 it cost on Thursday.

As for futures contracts, Gold prices increased to INR 62,871 per 10 gms from INR 62,640 per 10 gms.

Prices for Silver futures contracts decreased to INR 77,959 per kg from INR 77,515 per kg.

Global Market Movers: Comex Gold price resumes its uptrend amid subdued USD demand

• Bets that the Federal Reserve will not hike rates again and may start easing its monetary policy by the first half of 2024 continue to lend some support to the non-yielding Gold price.
• The CME group's FedWatch Tool indicates an even possibility that the Fed will cut policy rates as early as March 2024 and a near 80% chance of such a move at the May FOMC meeting.
• The bets were reaffirmed by the key inflation data on Thursday, which showed that the Personal Consumption Expenditures (PCE) Price Index remained unchanged in October.
• Over the 12 months, the PCE Price Index registered the smallest year-on-year increase since March 2021 and decelerated from 3.4% to 3.0% during the reported month.
• Moreover, the gauge that strips out volatile food and energy prices rose by a modest 0.2% in October and saw an annual rise of 3.5%, further pointing to signs of easing inflation.
• Another report showed that Jobless Claims rose to 218K last week and 1.93 million people were collecting unemployment benefits the week that ended November 18 – the most in two years.
• New York Fed President John Williams said on Thursday that it will be appropriate to maintain a restrictive stance for quite some time to bring inflation back to the 2% target.
• San Francisco Fed President Mary Daly noted that interest rates are in a very good place to control inflation, though she is not thinking about cuts and that it was too soon to say if hikes are finished.
• Given the recent mixed signals, the market attention will remain glued to Fed Chair Jerome Powell's speech, which could infuse some volatility and provide a fresh impetus to the XAU/USD.
• Traders will also confront the release of the US ISM Manufacturing PMI, which is expected to improve to 47.6 in November, though remains in contraction territory for the 12th straight month.

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EUR/CHF has seen some sharp losses this week to dip below the 0.95 mark. Economists at ING analyze the pair’s outlook.

Were EUR/CHF to fall too sharply, the SNB would probably flip from being an FX seller to an FX buyer

UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang expect USD/JPY to trade between 146.65 and 149.30 in the near term.

Key Quotes

CME Group’s flash data for crude oil futures markets noted traders added around 65.2K contracts to their open interest positions on Thursday. In the same line, volume resumed the uptrend and increased by around 664.2K contracts, the largest single-day build since April 3.

WTI: A drop to $72.00 appears in store

Prices of WTI retreated markedly on Thursday on the back of increasing open interest and volume. Against that, further losses appear likely in the very near term and face the immediate target at the November low of $72.22 per barrel (November 16).

AUD/USD is now predicted to navigate within the 0.6530-0.6665 range in the next few weeks, suggest UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

With the FX market set to remain highly sensitive to any activity data point, US ISM manufacturing for November will take centre stage today. Economists at ING analyze USD outlook.

USD reconnecting with its rate advantage

• USD/CAD could extend its losses toward the 1.3500 psychological support level.
• Technical indicators suggest bearish momentum in the pair.
• A break above the 1.3550 could reach the seven-day EMA at 1.3596.

USD/CAD extends its losses for the second successive day, trading lower around 1.3530 during the European session on Friday. The weakened US Dollar (USD) exerts pressure and undermines the pair. Furthermore, the rebound in WTI prices could provide support to the Canadian Dollar (CAD), consequently putting downward pressure on the USD/CAD pair.

The technical indicators for the USD/CAD pair support the current downward trend. The Moving Average Convergence Divergence (MACD) line is below the centerline and shows the divergence below the signal line, indicating a bearish momentum in the USD/CAD pair.

Furthermore, the 14-day Relative Strength Index (RSI) below 50 indicates a dovish sentiment, indicating that the USD/CAD pair could meet the support around the psychological level around 1.3500, followed by the next support at 1.3450 level.

On the upside, the major level at 1.3550 could act as a key barrier following the seven-day Exponential Moving Average (EMA) at 1.3596 lined up with the psychological level at 1.3600.

A decisive breakthrough above the latter could open the doors for the USD/CAD pair to explore the barrier around 23.6% Fibonacci retracement at 1.3621.

A resurgence in the US Dollar (USD) could motivate the bulls in the USD/CAD pair to target the significant level at 1.3650, with the possibility of reaching the weekly high at 1.3661 if it successfully surpasses the mentioned resistance.

USD/CAD: Daily Chart

• The Euro regains some composure against the US Dollar.
• European stocks open Friday’s session with generalized gains.
• Final PMIs, US ISM Manufacturing, Powell, Lagarde next on tap.

The Euro (EUR) manages to regain some balance against the US Dollar (USD) at the end of the week, prompting EUR/USD to revisit the area just beyond 1.0900 the figure.

On the flip side, the Greenback gives away part of the recent tw0-day recovery and recedes to the 103.40 zone when gauged by the USD Index (DXY) against the backdrop of the broad-based absence of direction in US yields across different timeframes.  

The current monetary policy stance remains steady, as investors take into account the possibility of future interest rate cuts by both the Federal Reserve (Fed) and the European Central Bank (ECB) in the spring of 2024.

In the domestic calendar, final Manufacturing PMI in Germany and the Eurozone for the month of November are due ahead of speeches by ECB’s Andrea Enria, Frank Elderson and President Christine Lagarde.

In the US, the ISM Manufacturing takes centre stage seconded by Construction Spending and the final S&P Global Manufacturing PMI for the month of November.

Daily digest market movers: Euro digests the recent sell-off around 1.0900

• The EUR looks directionless against the USD.
• US and German yields trade in a mixed note so far.
• Investors expect the Fed to start cutting its rates in the spring of 2024.
• Markets lean towards a protracted impasse of the ECB until Q2 2024.
• Chinese Caixin Manufacturing PMI rose past 50 in November.
• Lagarde will speak later in the session.
• Chair Powell will participate in a roundtable discussion.

Technical Analysis: Euro’s outlook remains positive above 200-day SMA  

EUR/USD alternates gains with losses in the sub-1.0900 region following Thursday’s pronounced pullback.

Extra losses could prompt EUR/USD to initially confront the key 200-day SMA at 1.0817, while the 55-day SMA at 1.0679 should provide further temporary contention. The loss of the latter exposes the weekly low of 1.0495 (October 13) ahead of the 2023 low of 1.0448 (October 3) and the round level of 1.0400.

Occasional bullish attempts should meet immediate hurdle at the November top of 1.1017 (November 29) seconded by the August peak of 1.1064 (August 10) and another weekly high of 1.1149 (July 27), all preceding the 2023 top of 1.1275 (July 18).

Meanwhile, the pair is seen maintaining its constructive outlook while above the 200-day SMA.

USD/CAD hovers around the mid-1.35s. Economists at ING analyze the pair’s outlook.

Pressure on the BoC to soften its hawkish bias is mounting

See – Canada Employment Preview: Forecasts from five major banks, jobless rate ticking higher

• Silver pulls back after hitting a near seven-month high earlier this Friday.
• The technical setup favours bulls and supports prospects for further gains.
• A slightly overbought RSI is seen as the only factor acting as a headwind.

Silver (XAG/USD) retreats from the vicinity of mid-$25.00s, or a near seven-month peak touched this Friday and refreshes daily low during the early part of the European session. The white metal, however, manages to hold above the $25.00 psychological mark and seems poised to prolong its well-established upward trajectory witnessed over the past three weeks or so.

The recent breakout through a technically significant 200-day Simple Moving Average (SMA), a multi-month-old descending trend line and the overnight close above the $25.00 mark validates the near-term positive outlook for the XAG/USD. That said, the Relative Strength Index (RSI) on the daily chart is flashing slightly overbought conditions and holding back bulls from placing fresh bets. Hence, it will be prudent to wait for some near-term consolidation or a modest pullback before positioning for any further gains.

From current levels, weakness below the $25.00 round figure is likely to find some support near the $24.75-$24.70 region. Any further pullback could be seen as a buying opportunity near the $24.20-$24.15 region and is likely to remain limited near the descending trend-line resistance breakpoint, around the $24.00 mark. The latter should act as a pivotal point, which if broken might prompt some technical selling and pave the way for a deeper corrective decline, towards retesting the 200-day SMA, near the $23.40-$23.35 area.

On the flip side, the multi-month peak, around the $25.45-$25.50 region, might now act as an immediate hurdle, above which the XAG/USD could accelerate the momentum towards reclaiming the $26.00 mark. Some follow-through buying beyond the YTD peak, around the $26.15 area touched in May, will be seen as a fresh trigger for bullish traders. The subsequent move-up has the potential to lift the white metal to the $27.00 neighbourhood, or the March 2022 yearly swing high.

Silver daily chart

Technical levels to watch

The US Dollar bounced into month end, but the NZD has held up. Economists at ANZ Bank analyze Kiwi’s outlook.

Relative stability in NZD/USD

• USD/MXN faces challenges to the subdued sentiment around the Fed’s rate trajectory.
• The likelihood of ending the Fed’s rate hikes puts pressure on the US bond yields.
• Mexico’s Jobless Rate eased to 2.7% from 2.9% prior.
• Banxico anticipated inflation to reach its 3.0% target by 2025.

USD/MXN snaps a two-day winning streak on the back of the weaker Greenback amid downbeat US Treasury yields, trading around 17.30 during the European session on Friday. The likelihood of ending the interest rate hike by the Federal Reserve drags the US yields downward. Furthermore, the US Dollar (USD) might have found support in recent US data.

The US Core Personal Consumption Expenditures Price Index (PCE) showed a month-on-month easing to 3.5% in October, a decrease from the previous reading of 3.7%. In the labor market, Initial Jobless Claims for the week ending November 24 totaled 218K, slightly below the anticipated 220K. These indicators provide insights into inflation trends and the labor market's health in the United States (US).

Mexico's economic updates include a lower-than-expected Jobless Rate at 2.7% YoY, below forecasts of 2.8% and September’s 2.9%. Additionally, the Fiscal Balance for October witnessed a significant decline in the fiscal deficit, dropping to 29.58B from the previous 132.56B.

In its quarterly report released on Wednesday, the Bank of Mexico (Banxico) revised its economic growth forecasts upward for 2023 and 2024. The bank anticipates that inflation will take longer to reach its target, projecting a 3.0% target by 2025. Governor Victoria Rodriguez Ceja has left the possibility of rate cuts open, with discussions expected in the first quarter of 2024.

The impending release of the US ISM Manufacturing PMI for November and the scheduled speech by US Federal Reserve (Fed) Chairman Jerome Powell on Friday hold substantial importance for market dynamics. Investors will closely monitor these events, as they have the potential to play a crucial role in determining the path of the USD/MXN pair.

The Euro came under considerable pressure after Thursday's November inflation data. Economists at Commerzbank analyze EUR outlook.

How quick or slow will the ECB be this time?

Open interest in gold futures markets dropped by nearly 8.7K contracts after two consecutive daily builds on Thursday, according to preliminary readings from CME Group. Volume followed suit and shrank for the third straight session, now by almost 65K contracts.

Gold: Next on the upside comes $2070

Thursday’s knee-jerk in gold prices was on the back of shrinking open interest and volume, hinting at the idea that further losses appear not favoured in the very near term and leaving the door open to the continuation of the ongoing uptrend. That said, the next target on the upside emerges at the 2023 top of $2067 per troy ounce (May 4).

Economists at Commerzbank retain their USD/TRY forecast of 35.00 by the end of 2024.

Credibility is a long, arduous process

• NZD/USD experiences pressure despite upbeat data from New Zealand.
• Kiwi Consumer Confidence improved to 91.9 in November from 88.1 prior.
• RBNZ Deputy Governor Christian Hawkesby said on Friday, “High and sticky core inflation leaves little room for error.”
• China's Caixin Manufacturing PMI rose to 50.7 and defied the anticipated decline to 49.8.

NZD/USD trims its intraday gains, still trading higher near 0.6160 during the Asian session on Friday. The NZD/USD pair received upward support as the US Dollar (USD) drifted lower on the back of subdued US bond yields. Additionally, New Zealand’s Roy Morgan Consumer Confidence released for November by the ANZ, showed that consumer confidence improved to 91.9 from 88.1 prior. The improved data could have supported the Kiwi pair’s strength.

Furthermore, the little hawkish remarks, from the Reserve Bank of New Zealand (RBNZ) Deputy Governor Christian Hawkesby, could provide support for the New Zealand Dollar (NZD). Hawkesby said on Friday, “High and sticky core inflation leaves little room for error.” Deputy Governor Hawkesby also concerned that certain measures of inflation expectations have shown an increase. New Zealand could benefit from a period of restrained spending. The majority of borrowers are currently able to manage their debt at the current interest rate levels.

In November, China's Caixin Manufacturing PMI surpassed expectations, rising to 50.7 and defying the anticipated decline to 49.8 from the previous reading of 49.5. This unexpected positive turn in the data has the potential to offer support and strengthen the Kiwi Dollar, considering the economic dynamics between China and New Zealand.

The US Dollar Index (DXY) faces a challenge as the US Bond yields react subdued, countering recent gains. The mixed US data might have helped the Greenback to gain ground. The US Core Personal Consumption Expenditures Price Index (PCE) displayed a MoM easing to 3.5% in October, down from the previous reading of 3.7%. In the labor market, Initial Jobless Claims for the week ending November 24 totaled 218K, slightly below the expected 220K. These indicators provide insights into inflation trends and the labor market's health, influencing economic assessments and potential policy decisions.

The upcoming release of the US ISM Manufacturing PMI for November and the speech by US Federal Reserve (Fed) Chairman Jerome Powell on Friday are events that can significantly influence market dynamics. Investors will be keenly observing these developments as they can play a pivotal role in shaping the trajectory of the US Dollar. Powell's remarks, in particular, may provide insights into the Fed's stance on monetary policy and its outlook on the economic landscape.

Here is what you need to know on Friday, December 1:

Risk sentiment remains tepid on Friday, as Asian stocks traded mostly lower, despite the Wall Street rally overnight. China’s Caixin Manufacturing PMI unexpectedly expanded to 50.7 in November but failed to impress markets, as factory activity in other key regions of Asia remained sluggish on weak global demand.

The US S&P 500 futures stay muted, as investors weigh the US Federal Reserve (Fed) interest rate cut expectations. Thursday’s US Core Personal Consumption Expenditures (PCE) Price index rose at an annual pace of 3.0% in October, cooling off from a three-month run of 3.4% readings. On a monthly basis, the Core PCE inflation showed no growth in the reported month, missing a forecast of a 0.1% increase while down from the 0.4% print registered in September.

New York Fed Bank President John Williams said on Thursday, “in balancing the risks of too-high inflation and a weaker economy, and based on what I know now, my assessment is that we are at, or near, the peak level of the target range of the federal funds rate.”

Falling inflation in the US strengthened dovish Fed expectations while the dovish commentary from Fed officials also played its part. The US Dollar has returned to the red zone alongside the US Treasury bond yields, snapping the previous rebound fuelled by the end-of-the-month short covering.

Markets continue to price a 48% chance of a rate cut in March next year compared with a 22% chance last week, the CME Group’s FedWatch tool showed on Friday.

At the time of writing, the US Dollar Index is holding the lower ground near 103.30, consolidating the weekly losses while the benchmark 10-year US Treasury bond yields are licking their wounds near 4.33%.

All eyes now remain on Fed Chair Jerome Powell’s dual appearance later in American trading. Powell is due to speak at 16 GMT and 19 GMT at two separate events organized by Spelman College in Georgia. His words will be closely scrutinized for fresh hints on the Bank’s path forward on interest rates. It will be Powell’s last public appearance before the December 12-13 policy meeting. The Fed enters its ‘blackout period’ on Saturday.

Besides, the US ISM Manufacturing PMI data will be also published in the US session, providing fresh US Dollar valuations.

Most major currencies are supported by the renewed US Dollar weakness. The Euro (EUR) seems to be the strongest heading to the European opening bells. EUR/USD is holding its recovery momentum above 1.0900, having hit fresh six-day lows at 1.0879 on Wednesday after European Central Bank’s (ECB) interest rate cut bets ramped on softer Euro area inflation data. Traders will look forward to the final Eurozone Manufacturing PMI later in the day ahead of ECB President Christine Lagarde’s speech.

GBP/USD is rebounding toward 1.2650, finding a floor amid hawkish BoE commentary. BoE’s hawkish dissenter, Megan Greene, said on Thursday, “…the policy may have to be restrictive for an extended period of time in order return inflation to 2% over the medium term.” The UK S&P Global final Manufacturing PMI data is awaited but is unlikely to have any impact on the Pound Sterling.

Antipodeans fail to find any inspiration from strong Chinese Caixin PMI data and a broadly weaker US Dollar, as a cautious market mood underwhelms. AUD/USD is challenging the 0.6600 level, reversing an early advance to 0.6630 while NZD/USD is flattish near 0.6150.

The Japanese Yen is partly reversing its weekly gain against the US Dollar, as USD/JPY is back above 148.00. USD/CAD is licking its wounds near 1.3550, awaiting the top-tier Canadian employment data.

WTI is recovering ground to near $76 after the OPEC+ decision disappointment.  Saudi Arabia, Russia and other members of OPEC+ agreed to voluntary output cuts for the first quarter of 2024. However, Angola rejected a new output quota handed to it by the alliance.  

Gold price is heading back toward $2,050, underpinned by dovish Fed expectations.

A drop below 1.2600 could expose a deeper retracement in GBP/USD in the near term, according to UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

• Asian equities trade in negative territory on Friday.
• India's Nifty 50 reached an all-time high on Friday following stronger-than-expected GDP Q2 growth numbers.
• Chinese Caixin Manufacturing PMI arrived at 50.7 in November vs. 49.5 prior, better than expected.
• Investors await the US ISM Manufacturing PMI data and Fed Chair Jerome Powell’s speech later on Friday.

Most Asian stocks edge lower on Friday amid the cautious mood in the market, despite the growing expectations that the Federal Reserve (Fed) and European Central Bank (ECB) are likely to cut rates, beginning in the middle of 2024.

At press time, China’s Shanghai was up 0.02% to 3,031, the Shenzhen Component Index declined 0.04% to 9,734, Hong Kong’s Hang Sang dropped 0.24% to 17,001, South Korea’s Kospi dropped 1.01%, Japan’s Nikkei was down 0.17% and India’s NIFTY 50 climbed 0.72% to 20,276, about 5 points away from its all-time high

India's Nifty 50 set a new high on Friday following stronger-than-expected economic growth in the September quarter, which fueled confidence about the Indian economic outlook. That being said, the Indian economy expanded 7.6% in the July–September quarter of the current fiscal year, marking the world’s fastest-growing major economy.

In China, mixed economic signals also kept optimism in check. Early Friday, the Chinese Caixin Manufacturing PMI came in at 50.7 in November from the previous reading of 49.5, above the market consensus of 49.8. However, the NBS PMI on Thursday showed persistent weakness in manufacturing activity and services sectors.

Apart from this, Japan's manufacturing activity contracted at the fastest pace in nine months, while South Korea's factory activity remained stable.

Looking ahead, investors await the US ISM Manufacturing PMI data. The November figure is estimated to climb to 47.6 from 46.7. Market players will take more cues from the Fed Chair Jerome Powell and the Fed's Goolsbee about further monetary policy and interest rate paths. Next week, attention will shift to the Reserve Bank of Australia (RBA) meeting, which is widely expected to keep interest rates on hold.

• The index alternates gains with losses around 103.30.
• Fed’s J. Powell will participate in a roundtable discussion.
• ISM Manufacturing, Construction Spending take centre stage.

The greenback, in terms of the USD Index (DXY), looks for direction around the 103.30 zone at the end of the week.

USD Index looks at Powell, key data

Following a two-day recovery, the index now trades in a cautious tone in light of the publication of key data releases and the speech by Chief Powell due later in the NA session.

In the meantime, speculation of interest rate cuts by the Federal Reserve at some point in the spring of 2024 remains on the rise despite some contrasting opinions from Fed policymakers.

In the US data space, the always-relevant ISM Manufacturing is due along with Construction Spending and the final S&P Global Manufacturing PMI for the month of November.

In addition, Chicago Fed A. Goolsbee (voter, centrist) is also due to speak.

What to look for around USD

The index managed to regain some balance after bottoming out in three-week lows near 102.40 earlier in the week.

Looking at the broader picture, the dollar appears depressed against the backdrop of rising speculation of probable interest rate cuts in H1 2024, all in response to further disinflationary pressures and the gradual cooling of the labour market.

Some support for the greenback, however, still emerges the resilience of the US economy as well as a persistent hawkish narrative from some Fed rate setters.

Key events in the US this week: Final S&P Global Manufacturing PMI, ISM Manufacturing PMI, Construction Spending, Fed’s Powell (Friday).

Eminent issues on the back boiler: Growing perception of a soft landing for the US economy. Speculation of rate cuts at some point in the spring of 2024. Omnipresent geopolitical effervescence vs. Russia and China. Potential spread of the Middle East crisis to other regions.

USD Index relevant levels

Now, the index is down 0.18% at 103.33 and faces immediate contention at 102.46 (monthly low November 29) ahead of 101.74 (monthly low August 4) and then 100.51 (weekly low July 27). On the upside, the breakout of 103.58 (200-day SMA) would open the door to 104.21 (weekly high November 22) and then 105.44 (55-day SMA).

In the view of UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang, EUR/USD could retreat to the 1.0810 region in the short-term horizon.

Key Quotes

• EUR/USD snaps the two-day losing streak, adding 0.20% for the day.
• The Relative Strength Index (RSI) stands below the 50.0 midline, indicating that further downside cannot be ruled out.
• The immediate resistance level is seen at 1.0935; the key support level is located at the 1.0870-1.0880 zone.

The EUR/USD pair finds some support near 1.0880 and then rebounds above the 1.0900 mark during the early European session on Friday. The recovery of the pair is bolstered by the softer US Dollar (USD) despite Eurozone inflation coming in worse than market expectations. The major currently trades around 1.0907, up 0.20% on the day.

The Harmonized Index of Consumer Prices (HICP), which measures inflation in the Eurozone, has raised expectations among investors that the European Central Bank (ECB) might start cutting its deposit rate as early as next April. Nonetheless, ECB President Christine Lagarde emphasized this week that now is not the time to declare victory since wage pressures remain high.

According to the four-hour chart, EUR/USD maintains a bullish outlook as the major pair holds above the key 100-hour Exponential Moving Averages (EMA) with an upward slope. However, the Relative Strength Index (RSI) stands below the 50.0 midline, indicating that further downside cannot be ruled out for the time being.

On the upside, the immediate resistance level for EUR/USD is seen near a low of November 28 at 1.0935. The next hurdle to watch is a high of November 21 at 1.0965. Any follow-through buying above the latter will see the rally to the key upside barrier at the 1.1015–1.1025 region, portraying the confluence of the Bollinger Band and a high of November 29.

On the flip side, the critical support level is located at the 1.0870–1.0880 zone. The mentioned level is the congestion of the 100-hour EMA and the lower limit of the Bollinger Band. The additional downside filter to watch is a low of November at 1.0852, followed by a low of November 17 at 1.0825, and finally a high of November 6 at 1.0755.

EUR/USD four-hour chart

• USD/CHF consolidates ahead of Swiss GDP data.
• Swiss Gross Domestic Product is expected to remain consistent at 0.5%.
• Investors await Fed Chair Jerome Powell’s speech on Friday.

USD/CHF hovers near 0.8750 during the Asian session on Friday, retracing its gains registered on Thursday. The decline in the US Dollar (USD) weighs on the USD/CHF pair following the likelihood of ending the interest rate hike by the US Federal Reserve (Fed).

Swiss Real Retail Sales on Thursday, declined by 0.1% compared to the expected growth of 0.2% in October. The downbeat Swiss consumer demand might have put pressure on the Swiss Franc (CHF). Moreover, Gross Domestic Product (GDP) data will be eyed on Friday.

However, Swiss National Bank (SNB) Chairman Thomas Jordan has acknowledged earlier the possibility of future interest rate hikes, contributing support to underpinning the CHF.

The US Dollar Index (DXY) faces a challenge as the US Bond yields react subdued, countering recent gains. The DXY trades lower at 103.30 at the time of writing. The mixed US data might have helped the Greenback to gain ground.

Additionally, the US Core Personal Consumption Expenditures Price Index (PCE) showed a YoY easing to 3.5% in October from the previous reading of 3.7%. The YoY Core PCE Price Index saw a decline of 0.2% from the prior 0.3%. Moreover, Initial Jobless Claims for the week ending November 24 totaled 218K, slightly below the expected 220K.

Investors await the release of the US ISM Manufacturing PMI for November, and they also have their eyes on the speech by US Federal Reserve (Fed) Chairman Jerome Powell scheduled for Friday. These events are likely to impact market dynamics and influence the trajectory of the US Dollar.

• WTI price experiences upward support on the subdued Greenback.
• Crude oil prices faced pressure on softer output cuts.
• OPEC+ decided to reduce a total of 2.2 million bpd for the first quarter of 2024.
• Downbeat US bond yields contribute to pressure on the US Dollar.

West Texas Intermediate (WTI) recovers the recent losses, trading higher around $75.90 per barrel. Crude oil prices see an improvement, propelled by a weaker US Dollar (USD). However, the WTI price faced losses following the decision of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) to implement voluntary output cuts, smaller than expected, for the first quarter of 2024.

OPEC announced a total reduction of 2.2 million barrels per day (bpd) from eight producers in a statement following the meeting. This includes the extension of voluntary cuts by Saudi Arabia and Russia, amounting to 1.3 million bpd. The additional 900,000 bpd of cuts pledged on Thursday comprises 200,000 bpd in fuel export reductions from Russia, with the remaining cuts distributed among six other member countries.

The pressure on oil markets intensified with the release of weak Purchasing Managers Index (PMI) data from China. Business activity in the world's largest oil importer displayed minimal signs of improvement in November. Although, on Friday, Manufacturing PMI in November showed improvement.

China's Caixin Manufacturing PMI surpassed expectations, recording an improvement to 50.7 in November, contrary to the expected decline to 49.8 from the previous reading of 49.5. This unexpected positive turn in the data could potentially offer support and strengthen the Crude oil prices.

On Wednesday, the US EIA Crude Oil Stocks Change for the week ending on November 24 reported the barrels of stock at 1.609M against the deficit of 0.933M. On Friday, Baker Hughes US Oil Rig Count will report the number of active rigs.

• Gold price regains positive traction on Friday and is underpinned by rising Fed rate cut bets.
• Growing concerns about a global economic downturn lend additional support to the metal.
• The risk-on mood might cap gains ahead of the US ISM PMI and Fed Chair Powell’s speech.

Gold price (XAU/USD) attracts some dip-buying during the Asian session on Friday and reverses a major part of the previous day's losses. The precious metal currently trades around the $2,040 region, up over 0.15% for the day and well within the striking distance of its highest level since May 5 touched on Wednesday. Data released from the United States (US) on Thursday showed that inflation continued to moderate in October and a slowing labour market, validating the view that the Federal Reserve (Fed) is done raising interest rates. The dovish outlook turns out to be a key factor benefitting the non-yielding yellow metal.

Meanwhile, a duo of Fed officials pushed back against expectations for a quick pivot to rate cuts and left the door open to further policy tightening should the progress on inflation stall. This, however, does little to dim the prospects for an imminent shift in the Fed's policy stance and keeps a lid on the recent US Dollar (USD) recovery from its lowest level since August 11. Apart from this, mixed signs on the strength of China's economy and darkening global outlook lend support to the safe-haven Gold price. That said, the recent risk-on rally in the US equity markets might cap the XAU/USD ahead of Fed Chair Jerome Powell's speech.

Daily Digest Market Movers: Gold price continues to draw support from dovish Federal Reserve expectations

• Bets that the Federal Reserve will not hike rates again and may start easing its monetary policy by the first half of 2024 continue to lend some support to the non-yielding Gold price.
• The CME group's FedWatch Tool indicates an even possibility that the Fed will cut policy rates as early as March 2024 and a near 80% chance of such a move at the May FOMC meeting.
• The bets were reaffirmed by the key inflation data on Thursday, which showed that the Personal Consumption Expenditures (PCE) Price Index remained unchanged in October.
• Over the 12 months, the PCE Price Index registered the smallest year-on-year increase since March 2021 and decelerated from 3.4% to 3.0% during the reported month.
• Moreover, the gauge that strips out volatile food and energy prices rose by a modest 0.2% in October and saw an annual rise of 3.5%, further pointing to signs of easing inflation.
• Another report showed that Jobless Claims rose to 218K last week and 1.93 million people were collecting unemployment benefits the week that ended November 18 – the most in two years.
• New York Fed President John Williams said on Thursday that it will be appropriate to maintain a restrictive stance for quite some time to bring inflation back to the 2% target.
• San Francisco Fed President Mary Daly noted that interest rates are in a very good place to control inflation, though she is not thinking about cuts and that it was too soon to say if hikes are finished.
• Given the recent mixed signals, the market attention will remain glued to Fed Chair Jerome Powell's speech, which could infuse some volatility and provide a fresh impetus to the XAU/USD.
• Traders will also confront the release of the US ISM Manufacturing PMI, which is expected to improve to 47.6 in November, though remains in contraction territory for the 12th straight month.

Technical Analysis: Gold price seems poised to appreciate further, bulls await a move beyond the multi-month peak

From a technical perspective, any subsequent move-up is likely to face some resistance near the $2,052 area, or a multi-month peak. With oscillators on the daily chart holding comfortably in the positive territory, some follow-through buying will be seen as a fresh trigger for bullish traders and allow the Gold price to accelerate the momentum further towards challenging the all-time high, around the $2,079-2,080 zone touched in May.

On the flip side, the overnight swing low, around the $2,030 area, could act as immediate support ahead of the $2,020 zone and the $2,010-$2,008 strong horizontal resistance breakpoint. The latter should act as a key pivotal point, which if broken might prompt some technical selling and drag the Gold price further below the $2,000 psychological mark, towards testing the next relevant support near the $1,990 region.

• Indian Rupee gains momentum on the upbeat Indian growth number.
• India’s GDP expanded by 7.6% for the Q2 of this fiscal year, making it the fastest-growing major economy.
• Investors will closely watch the US ISM Manufacturing PMI and Fed Chair Jerome Powell’s speech later on Friday.

Indian Rupee (INR) gathers strength on Friday, bolstered by the stronger-than-expected India’s growth number. The country’s GDP expanded 7.6% in the September quarter of this fiscal year and remained the fastest-growing major economy, according to the statistics ministry on Thursday. The expansion in the Indian economy was boosted by government spending and robust performance in the manufacturing, mining, and construction sectors. This reading came in better than the projections of 6.5% by the Reserve Bank of India (RBI).

Despite inflation falling to a four-month low of 4.87% in October, it is expected to remain above the RBI's 4% target for the next two years. The markets anticipate the RBI to remain hawkish in its upcoming policy and will keep its key interest rate unchanged at 6.50% for a fifth consecutive meeting.

Market players will focus on the US ISM Manufacturing PMI for November, due on Friday. The figure is expected to grow to 47.6 from 46.7. Furthermore, Fed Chair Jerome Powell is set to speak. Market anticipation has become more aggressive regarding Fed policy easing, with Fed funds futures now pricing five quarter-percentage-point rate cuts next year, according to the CME Group.

Daily Digest Market Movers: Indian Rupee trades on the front foot despite multiple global headwinds

• The Indian economy grew 7.6% in the July–September quarter of the current fiscal year 2023-24, remaining the world’s fastest-growing major economy.
• India's fiscal deficit from April to October was 8.04 trillion Indian Rupees or 45% of the estimate for the whole year.
• Indian Prime Minister Narendra Modi said on Thursday that the GDP growth data for the second quarter of the current fiscal year demonstrated the Indian economy's resilience and strength in the face of global challenges.
• Domestic demand in India continues to be the primary driver of economic activity, as external demand remains fragile.
• The Reserve Bank of India (RBI) is likely to maintain its key interest rate unchanged at 6.50% for a fifth consecutive meeting on December 8, according to a Reuters poll.
• US Core Personal Consumption Expenditures Price Index (Core PCE), the Federal Reserve’s preferred inflation gauge rose 0.2% MoM and 3.5% YoY in October.
• US Initial weekly Jobless Claims rose to 218K from the previous period week of 211K, below the 220K expected while the Continuing Claims surged to 1.930 million versus the 1.841 decline prior.
• US Gross Domestic Product Annualized for the third quarter (Q3) expanded 5.2% in the third quarter (Q3) from 4.9% in the previous reading, better than 5.0% estimated.

Technical Analysis: The Indian Rupee maintains its positive view

Indian Rupee edges higher on the day. The USD/INR pair has traded within a familiar range of 82.80–83.40 since September. Technically, USD/INR maintains the bullish vibe as the pair holds above the key 100-day Exponential Moving Average (EMA) on the daily chart. Additionally, the upward momentum is reinforced by the 14-day Relative Strength Index (RSI) that holds above the 50.0 midline.

The upper boundary of the trading range at 83.40 acts as an immediate target for USD/INR bulls. Any follow-through buying will see the next hurdle at the year-to-date (YTD) high of 83.47, en route to a psychological round mark of 84.00. On the downside, the critical contention level will emerge at the 83.00 psychological mark. A breach of this level will pave the way to the confluence of the lower limit of the trading range and a low of September 12 at 82.80, followed by a low of August 11 at 82.60.

• GBP/USD trims recent losses on subdued US Dollar.
• BoE’s Megan Greene indicated that interest rates remain elevated to curb persistent high inflation.
• US Dollar retraces its recent gains on downbeat US Treasury yields.

GBP/USD recovers its recent losses registered in the previous session, trading higher around 1.2650 during the Asian session on Friday. The GBP/USD pair strengthened on weaker US Dollar (USD) amid downbeat US Treasury yields. Additionally, Bank of England (BoE) officials have been sending hawkish signals throughout the week, providing a boost to the Pound Sterling (GBP). There is an estimate that the BoE will maintain higher interest rates for an extended period, especially considering that inflation is currently more than twice the central bank's target.

Interest rate-setter Megan Greene from the Bank of England expressed concerns about persistently high inflation, indicating that interest rates might need to remain elevated for an extended duration. This perspective contrasts with some recent data suggesting a potential downturn in the economy.

The US Dollar Index (DXY) encounters a challenge as the 2-year US Bond yield drops to 4.67%, by the press time, following recent gains. Despite the Greenback surging to 103.59 on Thursday, the DXY trades lower at 103.30.

Moreover, the US Core Personal Consumption Expenditures Price Index (PCE) displayed a year-on-year easing to 3.5% in October from the previous reading of 3.7%, meeting expectations. The month-on-month Core PCE Price Index saw a decrease to 0.2% from the prior 0.3%. Additionally, Initial Jobless Claims for the week ending November 24 totaled 218K, slightly below the expected 220K but higher than the revised previous figures of 211K (revised from 209K).

Investors await Nationwide Housing Prices from the United Kingdom (UK) on Friday, along with the US ISM Manufacturing PMI for November. Moreover, the focus will be on US Federal Reserve (Fed) Chairman Jerome Powell’s speech.

• USD/AD drifts lower for the second straight day and drops to over a two-month low on Friday.
• Fed rate cut bets, the risk-on mood undermine the USD and exert some pressure on the pair.
• Investors now look to Canadian jobs data, US ISM PMI and Fed Chair Jerome Powell’s speech.

The USD/CAD pair remains under some selling pressure for the second straight day on Friday and drops to over a two-month low during the Asian session. Spot prices currently trade around the 1.3540-1.3535 region and seem vulnerable to prolonging the recent well-established downtrend witnessed over the past three weeks or so.

The US Dollar (USD) meets with a fresh supply and for now, seems to have stalled a two-day recovery from its lowest level since August 11 set on Wednesday, which, in turn, is seen exerting pressure on the USD/CAD pair. Investors seem convinced that the Federal Reserve (Fed) will not hike interest rates again and may begin easing its monetary policy as early as March 2024. The bets were reaffirmed by the US macro data released on Thursday, showing that inflation continued to moderate in October and a slowing labor market. The dovish outlook, meanwhile, triggers a fresh leg down in the US Treasury bond yields and weighs on the buck.

Apart from this, the underlying bullish tone across the global equity markets, further dents the Greenbak's relative safe-haven status. The USD bulls, meanwhile, shrugged off the overnight hawkish remarks by Federal Reserve (Fed) officials. In fact, New York Fed Bank President John Williams, along with San Francisco Fed President Mary Daly, pushed back against expectations for a quick pivot to rate cuts and left the door open to further policy tightening should the progress on inflation stall. This suggests that the path of least resistance for the buck is to the downside and supports prospects for a further depreciating move for the USD/CAD pair.

That said, Crude Oil prices remain on the defensive below a two-and-half-week high touched on Thursday amid concerns over worsening demand in China and the fact that the new production cuts announced by the OPEC+ were voluntary. The announcement came amid some disagreements among OPEC+ members over reductions in output and also disappointed traders hoping for deeper supply cuts. Furthermore, data on Thursday showed that the Canadian economy unexpectedly contracted at an annualized rate of 1.1% in the third quarter. This, in turn, could undermine the commodity-linked Loonie and lend support to the USD/CAD pair.

Traders might also refrain from placing aggressive bets ahead of Friday's release of Canadian monthly employment details and the US ISM Manufacturing PMI. The focus, however, will remain on Fed Chair Jerome Powell's appearance later during the US session, which will play a key role in influencing the USD price dynamics and provide some meaningful impetus to the USD/CAD pair. Nevertheless, spot prices remain on track to register losses for the third straight week – also marking the fourth week of a fall in the previous five.

Technical levels to watch

Reserve Bank of New Zealand (RBNZ) Deputy Governor Christian Hawkesby said on Friday, “high and sticky core inflation leaves little room for error.”

Additional comments

Related reads

• China's Caixin Manufacturing PMI unexpectedly returns to expansion, with 50.7 in November
• NZD/USD holds positive ground below 0.6200 following Chinese PMI data

• The Japanese Yen is back in demand on Friday and draws support from hawkish BoJ expectations.
• Fed rate cut bets prompt fresh selling around the USD and exert downward pressure on USD/JPY.
• Investors now look forward to Fed Chair Jerome Powell’s speech for some meaningful impetus.

The Japanese Yen (JPY) kicks off the new month on a positive note and recovers a major part of its previous day's losses against the US Dollar (USD) despite the recent less hawkish comments by Bank of Japan (BoJ) policymakers. In fact, BoJ board members Seiji Adachi and Toyoaki Nakamura pushed back against market speculations about a major shift in the central bank's policy stance. Investors, however, seem convinced that a second consecutive year of significant wage hikes next year will offer an opportunity for the BoJ to consider stepping away from a decade-long monetary stimulus. This, to a larger extent, overshadows the upbeat market mood and acts as a tailwind for the JPY.

The USD, on the other hand, stalls this week's solid recovery move from its lowest level since August 11 in the wake of firming expectations that the Federal Reserve (Fed) will not hike interest rates again. The bets were reaffirmed by the US macro data released on Thursday, showing that inflation continued to moderate in October and a slowing labour market. This triggers a fresh leg down in the US Treasury bond yields, which is seen undermining the Greenback and exerting some pressure on the USD/JPY pair. That said, the overnight hawkish remarks by FOMC members could lend support to the USD ahead of Fed Chair Jerome Powell's later during the US session this Friday.

Daily Digest Market Movers: Japanese Yen bulls seem unaffected by the recent less hawkish remarks by BoJ officials

• Bank of Japan board member Seiji Adachi said on Wednesday that it was premature to debate an exit from negative interest rates as the country is yet to see a positive wage-inflation cycle become embedded enough.
• A fellow board member Toyoaki Nakamura noted on Thursday that now is not the time to consider shifting policy and that the BoJ must be cautious about phasing out its massive stimulus measures.
• Investors, meanwhile, expect that the substantial pay increases witnessed this year – the largest in over 30 years – will continue into 2024 and should allow the BoJ to pivot away from its dovish stance.
• Macro data released earlier this Friday showed that Japan's unemployment rate unexpectedly ticked down to 2.5% in October from 2.6% in the previous month and further underpins the Japanese Yen.
• The US Commerce Department reported on Thursday that inflation – as measured by the Personal Consumption Expenditures (PCE) Price Index – was unchanged in October as compared to 0.4% in September.
• Over the 12 months through October, the PCE Price Index decelerated from 3.4% to 3.0%, registering the smallest year-on-year increase since March 2021.
• The core PCE, which strips out volatile food and energy prices, rose by a modest 0.2% in October and saw an annual rise of 3.5%, matching expectations and pointing to signs of easing inflation.
• The number of Americans who applied for unemployment benefits rose by 7K to 218K during the week ended on November 25 and Continuing Claims surged to a two-year high.
• New York Fed Bank President John Williams said that the central bank's policy stance is the most restrictive in 25 years, and it will probably need to stay restrictive for quite some time.
• San Francisco Fed President Mary Daly struck a similar tone and noted that her base case does not call for any further rate hikes, though it was too early to know if the Fed is finished with the rate increases.
• The USD, however, struggles to attract any follow-through buying amid growing market conviction that the Fed may start easing its monetary policy as early as March 2024.
• Market participants now look forward to Fed Chair Jerome Powell's scheduled speeches later during the US session for short-term trading opportunities on the last day of the week.

Technical Analysis: USD/JPY manages to hold its neck above 100-day SMA pivotal support, not out of the woods yet

From a technical perspective, any subsequent decline might continue to find some support near the 100-day Simple Moving Average (SMA), currently pegged around the 147.15 region. This is followed by the 147.00 mark, below which the USD/JPY pair could slide back to the 146.65 region, or its lowest level since September 12 touched on Wednesday. Some follow-through selling could expose the 146.00 round figure before spot prices extend the downfall further towards the next relevant support near the mid-145.00s.

On the flip side, the 148.00 round figure might now offer some resistance ahead of the overnight swing high, around the 148.50 region. A sustained strength beyond the latter might trigger a short-covering rally and allow the USD/JPY pair to reclaim the 149.00 mark. The momentum could get extended further towards the 149.55-149.60 supply zone. The latter should act as a key pivotal point, which if cleared will suggest that spot prices have formed a near-term bottom.

• Australian Dollar recovers ground as the Greenback snaps recent gains.
• Australia’s Judo Bank Manufacturing PMI fell to 47.7 from the previous reading of 48.2.
• China's Manufacturing PMI improved to 50.7 against the expected decline to 49.8 from 49.5 prior.
• US Core PCE Price Index YoY and MoM eased at 3.5% and 0.2%, respectively.

The Australian Dollar (AUD) manages to halt a two-day losing streak on Friday. However, the recovery in the US Dollar contributed a pressure on the AUD/USD pair. Furthermore, disappointing Chinese data on Thursday exerted downward pressure on market sentiment, causing the China-linked Australian Dollar (AUD) to decline.

Australia’s Judo Bank Manufacturing PMI for November met expectations at 47.7, showing a slight dip from the previous reading of 48.2. The Reserve Bank of Australia is set to release the RBA Commodity Index SDR later today. This data holds significance as it serves as an early indicator of changes in export prices, thereby influencing both GDP and the value of the AUD.

China's Caixin Manufacturing PMI exceeded expectations by improving to 50.7 in November, defying the anticipated decline to 49.8 from the previous reading of 49.5. This positive surprise in the data has the potential to provide support and bolster the Australian Dollar, given the interconnected economic dynamics between China and Australia.

The US Dollar Index (DXY) surged as the US Treasury bond yield edged higher, with the 2 and 10-year Treasury yields reached at 4.73% and 4.36%, respectively on Thursday. Furthermore, the Greenback might have found support in economic data from the United States (US).

US Core Personal Consumption Expenditures Price Index (PCE) showed a year-on-year easing to 3.5% in October from the previous reading of 3.7%, aligning with expectations. The month-on-month Core PCE Price Index decreased to 0.2% from the prior 0.3%. Additionally, Initial Jobless Claims for the week ending November 24 totaled 218K, slightly below the anticipated 220K but higher than the revised previous figures of 211K (revised from 209K).

Daily Digest Market Movers: Australian Dollar gains ground on subdued US Dollar

• Australia's Private Capital Expenditure experienced a decline of 0.6% in Q3, contrasting with the previous growth of 2.8%. This contraction fell short of the expected rise of 1.0%.
• Aussie Monthly Consumer Price Index (CPI) for October shows a reading of 4.9%, a decrease from the previous reading of 5.6% in September and slightly below the expected 5.2%.
• Reserve Bank of Australia (RBA) Governor Michele Bullock highlighted that the current monetary policy is on the restrictive side, with rate hikes putting a damper on demand, particularly in the context of persistent services inflation.
• Governor Bullock emphasized the need for caution in employing high interest rates to combat inflation without inadvertently raising the unemployment rate.
• China's NBS Manufacturing PMI for November decreased to 49.4 from the previous reading of 49.5. The market expectation was for an increase to 49.7. The Non-Manufacturing PMI contracted to 50.2, falling short of the expected 51.1 and the previous reading of 50.6.
• US Gross Domestic Product Annualized increased by 5.2% during the third quarter from the previous reading of 4.9%, above the market consensus of 5.0.
• The latest Fed's Beige Book unveiled that the demand for labor has been "continuing to ease" over the weeks leading up to mid-November.

Technical Analysis: Australian Dollar maintains its position below the 0.6650 resistance level

The Australian Dollar trades higher around 0.6620 on Friday. The immediate hurdle appears to be the significant level at 0.6650, with November's high at 0.6676 following closely. If the pair successfully surpasses this level, it could pave the way for a test of the substantial resistance at the psychological mark of 0.6700, and beyond that, the August high at 0.6723. Conversely, on the downside, a critical support zone is situated around the psychological level of 0.6600, aligning with the seven-day Exponential Moving Average (EMA) at 0.6599. A clear breach below the EMA might lead the pair towards support near the 23.6% Fibonacci retracement level at 0.6580, followed by the major level at 0.6550.

AUD/USD: Daily Chart

China's Caixin Manufacturing Purchasing Managers' Index (PMI) unexpectedly expanded to 50.7 in November when compared to October’s contraction of 49.5, the latest data published on Friday.

The market consensus was for a 49.8 readout.

Key highlights (via Caixin)

"Demand continued to grow, as the gauge for new orders remained in expansionary territory for the fourth consecutive month, hitting the highest since June. Compared with consumer goods and intermediate goods, the supply and demand of investment goods were weaker,” said Wang Zhe, an economist at Caixin Insight Group.

"Overseas demand remained sluggish, with the measure for new export orders staying in contraction for the fifth straight month," Wang added.

On Thursday, China’s National Bureau of Statistics (NBS) released the country’s official Manufacturing Purchasing Managers' Index (PMI), which declined to 49.4 as against the 49.5 contraction registered in October. Markets expected a 49.7 readout in the reported month.

AUD/USD reaction to China’s PMI data

The upside surprise in the Chinese Manufacturing PMI fuelled a fresh bid under the Aussie Dollar, with AUD/USD  flirting with an intraday high near 0.6630, up 0.32% on the day.

• NZD/USD holds positive ground near 0.6185, up 0.44% on the day. 
• The Core PCE, the Fed’s inflation gauge, fell to its lowest level since the spring of 2021.
• Chinese Caixin Manufacturing PMI climbed to 50.7 in November vs. 49.5 prior.
• Traders will monitor US ISM Manufacturing PMI, Fed Chair Jerome Powell’s speech on Friday.

The NZD/USD pair drifts higher to 0.6185 during the early Asian session on Friday. The pair trades in positive territory for the third consecutive week, bolstered by the weaker US Dollar (USD) and the stronger Chinese PMI data. However, the 100-day Exponential Moving Average at 0.6200 on the weekly chart might cap the upside of NZD/USD.

According to data published Thursday, the Core Personal Consumption Expenditures Price Index, which excludes volatile gas and food prices, climbed 0.2% MoM and 3.5% YoY in October. The Federal Reserve’s preferred inflation gauge fell to its lowest level since the spring of 2021. 

Signs of cooling demand boosted the anticipation that the Fed's rate-hiking cycle was coming to an end. Policymakers hinted on Thursday that rate hikes were likely done, but pushed back the expectations of a rate cut.

On Wednesday, the Reserve Bank of New Zealand (RBNZ) maintained the Official Cash Rate (OCR) at 5.50%, as widely expected. However, the forecast peak OCR was raised from 5.59% to 5.69%, and the RBNZ is likely to cut the rate for the first half of 2025, which is a bit later than previously estimated. 

New Zealand’s Roy Morgan Consumer Confidence Index rose 4 to 91.9 in November from 88.1 in the previous reading. Despite the improvement, retailers continue to face substantial headwinds due to declining consumer spending and pessimistic sentiment.

Elsewhere, the latest data on Friday showed that the Chinese Caixin Manufacturing PMI improved to 50.7 in November from 49.5 in the previous month, stronger than the market expectation of 50.7. That being said, the upbeat Chinese data could boost the New Zealand Dollar (NZD) as China is its major trading partner.

Moving on, market players will focus on the US ISM Manufacturing PMI for November. The figure is estimated to climb to 47.6 from 46.7. Additionally, Fed Chair Jerome Powell and Fed's Goolsbee are set to speak and might offer some hints about further monetary policy paths. Market players will take cues from these events and find trading opportunities around the NZD/USD pair. 

The People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead on Friday at 7.1104 as compared to the previous day's fix of 7.1018 and  7.1458 Reuters estimates.

• EUR/USD finds support above 1.0900 on the softer Eurozone inflation data.
• Eurozone HICP eased to 2.4% YoY in November vs. 2.9% prior, the slowest annual pace since July 2021.
• Markets anticipate the Fed won’t raise rates at any of its upcoming meetings and might start cutting rates in the middle of 2024.
• Investors await ECB President Lagarde's speech, US ISM Manufacturing PMI on Friday.

The EUR/USD pair hovers around the 1.0900 psychological mark after retracing from the multi-month high of 1.1017 during the early Asian trading hours on Friday. Falling inflation and a stagnant economy in the Eurozone fuel hopes that interest rates could soon be cut. Nonetheless, the weaker US Dollar (USD) might cap the downside of the pair. The major pair currently trades around 1.0902, up 0.16% on the day.

Data from Eurostat revealed on Thursday that inflation in the eurozone, as measured by the Harmonized Index of Consumer Prices (HICP) eased to 2.4% YoY in November from 2.9% in the previous reading, the slowest annual pace since July 2021. On a monthly basis, the inflation figure dropped 0.5% versus a 0.1% rise previously. The main drivers for the slowing in HICP were falling energy costs and lower growth in food and service prices.

The Eurozone inflation report has spurred investors on speculation that the European Central Bank will begin cutting its deposit rate as soon as next April. However, ECB President Christine Lagarde cautioned this week that it was not the time to start declaring victory as wage pressures remain strong.

Across the pond, the markets anticipate the likelihood that the Federal Reserve (Fed) won’t raise rates at any of its upcoming meetings and might start cutting rates in the middle of 2024. This, in turn, weighs on the US Dollar (USD) and acts as a tailwind for the EUR/USD pair.

About the data, the US Core Personal Consumption Expenditures Price Index (core PCE), rose 0.2% MoM and 3.5% YoY in October, in line with the expectation. Meanwhile, the Initial weekly Jobless Claims rose to 218K from the previous period week of 211K, below the 220K estimated. The Continuing Claims surged to 1.93 million, the highest level since November 27, 2021.

Market participants will keep an eye on ECB President Lagarde's speech on Friday for fresh impetus. In the American session, the US ISM Manufacturing PMI for November will be released and Fed Chair Jerome Powell is set to speak.